New Delhi, Nov 12 : India's inflation rate based on the Consumer Price Index (CPI) declined further to 0.25 per cent in October as the impact of the GST rate cut brought down the prices of goods and services during the month, according to figures released by the Ministry of Statistics on Wednesday.

The retail inflation eased further, after having plummeted to an over 8-year low of 1.54 per cent in September, as prices of food items and goods across sectors fell during the month.

The declining trend in food prices continued in October as food inflation fell deeper in the negative zone at (-) 5.02 per cent from (-) 2.28 per cent in September. Food inflation has now continued to stay negative for the fifth consecutive month, bringing welcome relief to household budgets.

"The decline in headline inflation and food inflation during October is mainly attributed to the full monthâ??s impact of the decline in GST, favourable base effect, and to drop in inflation of cooking oils, vegetables, fruits, egg, cereals, footwear and transport and communication," an official statement said.

The GST rate cuts, which kicked in on September 22, are bringing down prices across goods, leading to a further reduction in the inflation rate.

The inflation outlook for 2025-26 has also become more benign due to large favourable base effects combined with the good southwest monsoon, healthy kharif sowing, adequate reservoir levels, and comfortable buffer stocks of foodgrains.

The decline in the inflation rate gives the RBI more headroom to continue with a soft money policy by cutting interest rates and injecting more money into the economy to spur growth.

The RBIâ??s monetary policy committee (MPC) on October 1 slashed its forecast for Indiaâ??s inflation rate for the financial year 2025-26 to 2.6 per cent from 3.1 per cent in August, primarily on account of the GST rate cuts and benign food prices.

RBI Governor Sanjay Malhotra had said: "The recently implemented GST rate rationalisation would lead to a reduction in prices of several items in the CPI basket. Overall, the inflation outcome is likely to be softer than what was projected in the August monetary policy committee resolution, primarily on account of the GST rate cuts and benign food prices."

Addressing journalists after the MPC meeting, he said that the "overall inflation outlook has turned even more benign in the last few months".

Malhotra said that the average headline inflation for 2025-26 is now revised lower from 3.7 per cent and 3.1 per cent projected in the June and August policy, respectively, to 2.6 per cent. Headline inflation for Q4:2025-26 and Q1:2026-27 too have been revised downwards and are broadly aligned with the target, despite unfavourable base effects. Core inflation for this year and Q1:2026-27 is also expected to remain contained.

The RBI Governor pointed out that headline CPI inflation declined to its eight-year low of 1.6 per cent year-on-year in July 2025 before rising to 2.1 per cent in August â?? its first increase after nine months. Benign inflation conditions during 2025-26 so far have been primarily driven by a sharp decline in food inflation from its peak in October 2024.

Inflation within the fuel group moved in a narrow range of 2.4-2.7 per cent during June-August. Core inflation remained largely contained at 4.2 per cent in August. Excluding precious metals, core inflation was at 3.0 per cent in August.

The RBI Governor further stated that the current macroeconomic conditions and the outlook have opened up policy space for further supporting growth.

/IANS